What restaurants need to know since Global Payments merged with TSYS

As of May 28, two major players in the payments industry, Global Payments and TSYS, officially announced a $21.5 billion dollar merger. “It marks the third mega-deal in the industry since the start of 2019 and underscores the changing nature of the marketplace,” Donna Fuscaldo, a senior contributor at Forbes, said. The other two mega-deals were Fiserv acquiring First Data Corp. for $22 billion and Fidelity National Services acquiring WorldPay for $34 billion. Mega-deals like this reflect the increasing popularity of the digital payments realm and the fact that players in the industry have their sights on expanding their business offerings.

The industry and digital payments space is growing in both complexity and size, making it more and more confusing for merchants and our customers. We’d like to ease this confusion by sharing a bit about what this means for restaurants nationwide. 

What does this mean for the end user and the other companies who are playing in the tech space? 

For an end user, the merger means that even if you felt you weren’t a number before, you’re absolutely a number now (and a much smaller number at that). Further, any semblance of consistency you thought you had is gone. 

If you have a relationship with an individual representative at your processing partner, that’s great—that individual can help serve your best interests. This is why having a relationship with your merchant representative is so important. However, because of the acquisitions/mergers, employees of these companies leave or are let go. When that happens to your sales representative, these companies have a history of raising rates without notice on those merchants—to a tune of 2-10 times higher.

Why this merger represents the commoditization of Point Of Sale?

Global and TSYS both had plans to develop a home-grown piece of software for the POS industry, and this was spurred by the realization that the lack of having proprietary software was a severe weakness in maintaining and growing their number of accounts. 

Both companies failed in that effort. 

Prior to this merger, one of the major reasons why Global acquired Heartland Payments in 2016 was because Heartland had bought major POS legacy players in addition to having a wealth of merchant accounts. Heartland/Global currently has 75,000 POS sites according to their homepage. Similarly, Shift4 focused on acquisition of technology and currently has 185,000 customers.

However, none of these credit card companies have been able to turn themselves into software companies. What these companies have done, is instead of transforming into a new direction, they have instead bought as many merchant accounts as they can to achieve the economies of scale for their shareholders.

Why is there such a gap between what exists and what customers want?

If you are a tech service provider or a tech company looking to enter this industry, the time has never been more right for new entries because currently, there are a number of cloud-based software that are getting traction: Revel, Bread Crumb, and Toast, to a greater extent. 

Toast has taken $250 million in funding as of April 2019, but they’re not profitable; Revel was taken completely private in a full-equity deal because they had two down rounds in a row. They’re taking a role now in 7/11 stores, but software that’s good for 7/11 stores won’t be good for the small and medium sized businesses.  

In our research, customers do not want to figure out 18 different technologies and pare down a list of hundreds of potential suitors. Instead, they want someone knowledgeable to install and utilize a platform that has all of their desired functions unified in one. 

This is the problem Flyght is trying to solve. 

This opportunity is evermore apparent in these large-scale acquisitions such as Global and TSYS. The larger these companies become, they transform to be less innovative and more cookie cutter, and, therefore, these companies are less able to fulfill the requests and needs of their customers. That is why there is a gap between what exists and what customers want. That is the reason the market is so ripe for innovation.

What do Flyght customers need to know?

1. If you use TSYS or Global for merchant services and don't know who your merchant representative is, it’s time to start shopping for a new merchant provider. It’s probable that your rates are skyrocketing, and you are paying more than you should.
2. If the POS system you use is owned by any one of these companies, you need to realize any further innovation in that software will be decreasing as time moves forward. Innovation means new features, software updates, moving data into the cloud, selling in an omni-channel way, and unified communication across multiple products that are used by the business on any given day. 
3. If you find yourself calling an endless amount of phone numbers for your different tech needs, it’s time to contract with fewer vendors. As time progresses, it is increasingly important to find a company that offers multiple solutions and isn't just a peddler-of-many who says, “You figure it out, and we’ll help implement it.” You want a leader in the industry who is going to come in and discover the solution unique to your business.

The merger of key players Global Payments and TSYS makes business more complex than ever for the passionate restaurateur that simply wants to make revolutionary food for their patrons. They don’t need to be tech experts. We need to be. 

How have you been affected by the merger? What do you see happening in our industry with acquisitions and mergers that we’re missing here? Chime in below. 

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